NEWARK, N.J. (Legal Newsline) - New Jersey Bankruptcy Court Chief Judge Michael B. Kaplan has granted Johnson & Johnson offshoot LTL Management LLC’s request to stay litigation for at least 60 days. The ruling, issued this week, allows ovarian cancer claimants to vote on a settlement offer.
“The decision is a win for claimants, who are now one step closer to being able to vote for themselves on whether to accept the proposed resolution,” said Erik Haas, worldwide vice president of litigation at Johnson & Johnson.
After the U.S. Court of Appeals for the Third Circuit ruled against J&J’s bankruptcy on Feb. 2, plaintiffs’ lawyers asked for relief from an automatic stay filed by LTL last year. But Kaplan ordered that the automatic stay remain in effect.
"The debtor comes before this court with an alleged 55,000 or more claimants in support of a proposed settlement," Kaplan stated. "The more limited preliminary injunction to be entered will prohibit the commencement or continuation of any trial against any of the protected parties identified in Appendix B to the verified complaint as amended through and including June 15th, 2023, a period of approximately 60 days. This is aimed at preventing the liquidation of claims for which this debtor may have liability with the liquidation occurring outside of this bankruptcy. But to be clear, I am neither enjoining nor restraining the filing of new complaints against the protected parties nor am I enjoining or restraining any ongoing discovery or other pre-trial matters."
As previously reported in Legal Newsline, LTL counsel on April 4 filed a proposal that would resolve all current and future talc-related claims by establishing a trust similar to those other companies have used for decades to settle asbestos-related claims.
“We are confident the vote will overwhelmingly support the proposal, as it presents the only equitable path forward,” Haas told Legal Newsline. “The proposal commits $8.9 billion to claimants, whose claims otherwise would languish in the tort system for decades and, based upon the trial record to date, likely would not receive a single dollar.”
Major plaintiffs’ law firms representing most of the claimants in this litigation reportedly support the plan, including lawyers who previously opposed the first bankruptcy filing, according to Haas.
“Despite this support, we expect a few plaintiffs’ law firms will continue to oppose and seek to delay this plan,” he said. “The evidence presented to the court this week shows that these firms have a profit motive to remain in the tort system that is at odds with the interests of their clients.”
The tentative settlement agreement is with lawyers who represent more than 60,000 plaintiffs and puts the LTL Management unit, which holds the talc liabilities, into Chapter 11 bankruptcy for a second time.
“When presented with a clear and complete explanation and the opportunity to make an informed choice, we firmly believe the claimants will approve the plan,” Haas added.